The FAST method: estimating unconditional demand elasticities for processed foods in the presence of fixed effects

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TR Number
Date
2004-08
Journal Title
Journal ISSN
Volume Title
Publisher
Western Agricultural Economics Association
Abstract

This study estimates a set of unconditional own-price and expenditure elasticities across time for 49 processed food categories using scanner data and the FAST multistage demand system with fixed effects across time. Estimated own-price elasticities are generally much larger, in absolute terms, than previous estimates, while our expenditure elasticities are generally much lower. The use of disaggregated product groupings, scanner data, and the estimation of unconditional elasticities likely accounts for these differences. Results of the study suggest providing more disaggregate product-level demand elasticities could aid in the economic analysis of issues relating to industry competitiveness or the impact of public policy.

Description
Keywords
demand elasticities, indirect separability, processed foods, weak separability, price leadership, welfare losses, meat-products, systems, agricultural economics & policy, economics
Citation
Bergtold, J.; Akobundu, E.; Peterson, E. B., "The FAST method: estimating unconditional demand elasticities for processed foods in the presence of fixed effects," JARE 29(2):276-295 (2004); http://purl.umn.edu/31108